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GOODWILL AND INTANGIBLE ASSETS
 12 Months Ended
Jan. 01, 2017
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets
GOODWILL AND INTANGIBLE ASSETS
Goodwill
The following table reflects changes in the carrying amount of goodwill by our reportable segments:
(in thousands)
PeopleReady
PeopleManagement
PeopleScout
Total company
Balance at December 25, 2015
 
 
 
 
Goodwill before impairment
$
106,304

$
103,977

$
104,424

$
314,705

Accumulated impairment loss
(46,210
)
—

—

(46,210
)
Goodwill, net
60,094

103,977

104,424

268,495

 
 
 
 
 
Acquired goodwill and other (1)
—

(3,831
)
25,491

21,660

Impairment loss
—

(50,700
)
(15,169
)
(65,869
)
Foreign currency translation
—

—

(63
)
(63
)
 
 
 
 
 
Balance at January 1, 2017
 
 
 
 
Goodwill before impairment
106,304

100,146

129,852

336,302

Accumulated impairment loss
(46,210
)
(50,700
)
(15,169
)
(112,079
)
Goodwill, net
60,094

49,446

114,683

224,223

 
 
 
 
 
Foreign currency translation
—

—

2,471

2,471

 
 
 
 
 
Balance at December 31, 2017
 
 
 
 
Goodwill before impairment
106,304

100,146

132,323

338,773

Accumulated impairment loss
(46,210
)
(50,700
)
(15,169
)
(112,079
)
Goodwill, net
$
60,094

$
49,446

$
117,154

$
226,694



(1) Effective January 4, 2016, we acquired the RPO business of Aon Hewitt, which is part of our PeopleScout reportable segment. Accordingly, the goodwill associated with the acquisition has been assigned to our PeopleScout reportable segment based on our purchase price allocation. Effective December 1, 2015, we acquired SIMOS, which is part of our PeopleManagement reportable segment. The amount presented includes year-to-date adjustments to the preliminary SIMOS purchase accounting for goodwill. For additional information see Note 2: Acquisitions.

Intangible assets
Finite-lived intangible assets

The following table presents our purchased finite-lived intangible assets:
 
December 31, 2017
 
January 1, 2017
(in thousands)
Gross carrying amount
Accumulated
amortization
Net
carrying
amount
 
Gross carrying amount
Accumulated
amortization
Net
carrying
amount
Finite-lived intangible assets (1):
 
 
 
 
 
 
 
Customer relationships (2)
$
148,114

$
(53,801
)
$
94,313

 
$
165,725

$
(54,676
)
$
111,049

Trade names/trademarks (3)
4,149

(3,736
)
413

 
4,378

(3,385
)
993

Non-compete agreements
1,400

(1,377
)
23

 
1,400

(1,097
)
303

Technologies
17,500

(13,588
)
3,912

 
17,009

(9,683
)
7,326

Total finite-lived intangible assets
$
171,163

$
(72,502
)
$
98,661

 
$
188,512

$
(68,841
)
$
119,671


(1)
Excludes assets that are fully amortized.
(2)
Balance at January 1, 2017, is net of impairment loss of $28.9 million.
(3)
Balance at January 1, 2017, is net of impairment loss of $4.3 million.

Amortization expense of our finite-lived intangible assets was $21.4 million, $25.1 million and $19.9 million for the years ended December 31, 2017, January 1, 2017 and December 25, 2015, respectively.
The following table provides the estimated future amortization of finite-lived intangible assets as of December 31, 2017:
(in thousands)
 
2018
$
19,821

2019
17,299

2020
15,736

2021
12,431

2022
12,128

Thereafter
21,246

Total future amortization
$
98,661


Indefinite-lived intangible assets

We also held indefinite-lived trade names/trademarks of $6.0 million as of December 31, 2017 and January 1, 2017.

Impairments
There were no goodwill or intangible asset impairment charges recorded during fiscal 2017 or 2015.
2016 impairments
We performed our annual goodwill impairment analysis as of the first day of our second quarter of fiscal 2016. This analysis required significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur and determination of our weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested. The weighted average cost of capital used in our most recent annual impairment test was risk-adjusted to reflect the specific risk profile of the reporting units and ranged from 12.0% to 17.0%.
As a result of our test we recorded a goodwill impairment charge of $65.9 million relating to the Staff Management, PlaneTechs and hrX reporting units as follows:

•
Staff Management: In April 2016, we were notified by our former largest customer of its plans to reduce the use of contingent labor and realign its contingent labor vendors for warehousing. Our former largest customer announced it would be reducing the use of our services for its warehouse fulfillment centers in the United States and focusing our services on its planned expansion of distribution service sites to a national network for delivery direct to the customer.
◦
Goodwill impairment - We estimated that the change in scope of our services would decrease revenues by approximately $125 million compared to the prior year. As a result, we lowered our future expectations, which resulted in a goodwill impairment charge of $33.7 million.
◦
Intangible asset impairment - The significant decrease in scope of services by our former largest customer required us to lower our future expectations, which was the primary trigger of an impairment charge to our acquired customer relationships intangible asset of $28.9 million and indefinite-lived intangible assets trade name of $4.5 million. Considerable management judgment was necessary to determine key assumptions, including projected revenue, royalty rates, and an appropriate discount rate of 13.0% for the customer relationships intangibles asset and 17.0% for the indefinite-lived trade-name. In addition, we utilized the relief from royalty method to determine the fair value of Staff Management’s indefinite-lived trade name using a royalty rate of 10.0%.
•
PlaneTechs: Revenue declined significantly compared to fiscal 2015 as large projects were completed for a major aviation customer and its supply chain and anticipated projects did not occur to the extent expected. PlaneTechs has been diversifying from providing services to one primary customer without offsetting growth in the broader aviation and transportation marketplace. As a result of significantly underperforming against current year expectations and increased future uncertainty, we lowered our future expectations, which resulted in a goodwill impairment charge of $17.0 million.
•
hrX: Sales of this service line included our internally developed applicant tracking software (“ATS”). ATS sales and prospects have underperformed against our expectations. As a result of underperforming against our expectations and increased future uncertainty in customer demand, we lowered our future expectations, which resulted in a goodwill impairment charge of $15.2 million. Note, our PeopleScout and hrX service lines were combined during fiscal 2016 and now represent a single operating segment (PeopleScout).
Spartan and CLP Resources: In the third quarter of fiscal 2016, we finalized the changes to the organizational and reporting structure of our Labor Ready, Spartan Staffing and CLP Resources service lines, which resulted in them merging into one service line. The combined service line was re-branded as PeopleReady. As a result, we recognized an impairment charge of $4.3 million for the remaining net book value of the Spartan and CLP Resources trade name/trademarks intangible assets.